UPDATE 1-Mercuria sees strategic stake deal in 6 months

January 25, 2013|Reuters

By Dmitry Zhdannikov

DAVOS, Switzerland, Jan 25 (Reuters) - Mercuria is seekingto sell up to a fifth of itself to a strategic investor withinthe next six months and is also looking to increase partnershipswith China, its head said on Friday.

Marco Dunand, president and chief executive of Swiss-basedMercuria Energy Trading, told Reuters the company has grown rapidly to become one of the world's top five energy traders expanded again last year.

"There is more interaction between various energy sources.In order to properly understand it, you need to trade across allenergy sources," he said on the sidelines of the world economicforum in Davos.

The firm's turnover was around $100 billion in 2012 and ittraded 156 million tonnes of crude oil and products. In 2011,the revenue was around $75 billion and $47 billion in 2010.

Non-oil business represented 50 percent of Mercuria'sbusiness and the regional split of business was roughly a thirdbetween Europe, Asia and the United states, he said.

He also said the company was looking to expand business andpartnerships with China after the sale of half its terminalbusiness in Europe to China's Sinopec. The two are now lookingat partnering at a terminal in China.

Dunand also said oil prices were unlikely to fall below $90per barrel in the next couple of years, held in check by themarginal cost of producing oil and by supply from theOrganization of the Petroleum Exporting Countries.

"For the foreseeable future, by that I mean a couple ofyears, $90 per barrel will be the floor for the oil price,capped by the marginal production cost, while OPEC will play aswing role," Dunand said.

Further ahead oil could rather face downward pressure as thecost of fracking, breaking up rock formations to extract the oiland gas they contain, becomes cheap and OPEC's spare capacitywill rise.

"Saudi Arabia has the capacity to cut further to supportprices but if the shale oil revolution starts getting outside ofthe U.S. and particularly in China and Russia they will have torethink that strategy. They cannot continue cutting eternally tothe benefit of the others," he said.

Tensions around Iran have been supporting the prices in thepast years, but the impact might diminish as the United Stateshas said it was ready to release fuel from its StrategicPetroleum Reserve to protect the world economy should oil pricesspike.

"With a potential SPR release and OPEC spare capacityrising, Iran's production can in theory fully disappear from themarket. Therefore, Iran might have to start negotiations,"Dunand said.

He also said new trends in the oil industry were constantlyemerging at a great speed because of the U.S. shale revolution."We have see gasoline fixtures from Houston to Libya. It becomesvery interesting as the U.S. emerges as a very large productsexporter," he said.